Item 1.01. Entry into a Material Definitive Agreement.
On December 10, 2021, II-VI Incorporated (the "Company") issued $990 million
aggregate principal amount of its 5.000% senior notes due 2029 (the "Notes")
pursuant to an Indenture, dated as of December 10, 2021 (the "Indenture"), among
the Company, the guarantors party thereto and U.S. Bank National Association, as
trustee (the "Trustee"). The Notes are guaranteed by each of the Company's
domestic subsidiaries that guarantee its existing credit agreement. The Notes
were offered and sold either to persons reasonably believed to be "qualified
institutional buyers" pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act") or to persons outside the United States under
Regulation S of the Securities Act. Interest on the Notes will be payable on
December 15 and June 15 of each year, commencing on June 15, 2022, at a rate of
5.000% per annum. The Notes will mature on December 15, 2029.
The Company intends to use the proceeds from the Offering, together with other
financing sources (including the Term Facilities (as defined below)) and cash on
hand, to fund the cash consideration, the repayment of certain indebtedness and
certain fees and expenses in connection with the Company's previously announced
pending business combination with Coherent, Inc. ("Coherent"), pursuant to an
Agreement and Plan of Merger, dated March 25, 2021 (the "Agreement and Plan of
Merger"), by and among the Company, Coherent and Watson Merger Sub Inc., a
wholly owned subsidiary of the Company (the "Coherent Acquisition").
On or after December 15, 2024, the Company may redeem the Notes, in whole at any
time or in part from time to time, at the redemption prices set forth in the
Indenture, plus accrued and unpaid interest, if any, to, but excluding, the
applicable redemption date. In addition, at any time prior to December 15, 2024,
the Company may redeem the Notes, at its option, in whole at any time or in part
from time to time, at a redemption price equal to 100% of the principal amount
of the Notes redeemed, plus a "make-whole" premium set forth in the Indenture,
plus accrued and unpaid interest, if any, to, but excluding, the applicable
redemption date. Notwithstanding the foregoing, at any time and from time to
time prior to December 15, 2024, the Company may redeem up to 40% of the
aggregate principal amount of the Notes using the proceeds of certain equity
offerings as set forth in the Indenture, at a redemption price equal to 105.000%
of the principal amount thereof, plus accrued and unpaid interest, if any, to,
but excluding, the applicable redemption date. In addition, if (i) the
consummation of the Coherent Acquisition has not been consummated on or prior to
11:59 p.m., Eastern Time, on December 15, 2022 or (ii) the Company informs the
Trustee in writing or otherwise announces in writing that the Coherent
Acquisition is no longer being pursued and/or the Agreement and Plan of Merger
has been terminated without consummation of the Coherent Acquisition, then the
Company will be required to redeem all of the outstanding notes at a redemption
price equal to 100% of the principal amount of the notes, plus accrued and
unpaid interest, if any, to, but excluding, the applicable redemption date.
The Indenture contains customary covenants and events of default, including,
default relating to among other things, payment default, failure to comply with
covenants or agreements contained in the Indenture or the Notes and certain
provisions related to bankruptcy events.
The foregoing description of the Indenture is only a summary and does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Indenture, a copy of which is filed as Exhibit 4.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference herein.
Item 8.01. Other Events.
On December 10, 2021, the Company issued a press release announcing the closing
of the Offering and the allocation and pricing of a new term loan A credit
facility (the "Term Loan A Facility") in an aggregate principal amount of
$850 million, a new term loan B credit facility (the "Term Loan B Facility" and,
together with the Term Loan A Facility, the "Term Facilities") in an aggregate
principal amount of $2,800 million, and a new revolving credit facility (the
"Revolving Credit Facility") in an aggregate principal amount of $350 million,
which Term Facilities are expected to be borrowed in connection with the closing
of the Coherent Acquisition. The Revolving Credit Facility is expected to be
available concurrently with the closing of the Coherent Acquisition. The Term A
Facility and Revolving Credit Facility borrowings in U.S. dollars will each bear
interest at LIBOR (subject to a 0.00% floor) plus a range of 1.75% to 2.50%,
depending on the Company's total net leverage ratio. The Term A Facility and the
Revolving Credit Facility Borrowings are initially expected to bear interest at
LIBOR plus 2.00%. The Term Loan B Facility will bear interest at LIBOR (subject
to a 0.50% floor) plus 2.75%. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated by reference herein.
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The information contained in this report, including the exhibits hereto, shall
not constitute an offer to sell, or a solicitation of an offer to purchase, any
Notes in any jurisdiction in which such an offer, solicitation or sale would be
unlawful.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
4.1 Indenture, dated as of December 10, 2021, among the Company, the
guarantors party thereto and U.S. Bank National Association, as trustee.
4.2 Form of 5.000% Senior Notes due 2029 (included in Exhibit 4.1).
99.1 Press Release, dated December 10, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
Forward-looking Statements
This communication contains forward-looking statements relating to future events
and expectations that are based on certain assumptions and contingencies. The
forward-looking statements are made pursuant to the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995 and relate to the
Company's performance on a going-forward basis. The forward-looking statements
in this communication involve risks and uncertainties, which could cause actual
results, performance or trends to differ materially from those expressed in the
forward-looking statements herein or in previous disclosures.
The Company believes that all forward-looking statements made by it in this
communication have a reasonable basis, but there can be no assurance that the
expectations, beliefs or projections as expressed in the forward-looking
statements will actually occur or prove to be correct. In addition to general
industry and global economic conditions, factors that could cause actual results
to differ materially from those discussed in the forward-looking statements in
this communication include, but are not limited to: (i) the failure of any one
or more of the assumptions stated above to prove to be correct; (ii) the risks
relating to forward-looking statements and other "Risk Factors" discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 and
additional risk factors that may be identified from time to time in future
filings of the Company; (iii) the conditions to the completion of the Company's
pending business combination transaction with Coherent, Inc. (the "Transaction")
and the remaining equity investment by Bain Capital, LP, including the receipt
of any required regulatory approvals, and the risks that those conditions will
not be satisfied in a timely manner or at all; (iv) the occurrence of any event,
change or other circumstances that could give rise to an amendment or
termination of the merger agreement relating to the Transaction; (v) the
Company's ability to finance the Transaction, the substantial indebtedness the
Company expects to incur in connection with the Transaction and the need to
generate sufficient cash flows to service and repay such debt; (vi) the
possibility that the Company may be unable to achieve expected synergies,
operating efficiencies and other benefits within the expected time-frames or at
all and to successfully integrate Coherent's operations with those of the
Company; (vii) the possibility that such integration may be more difficult,
time-consuming or costly than expected or that operating costs and business
disruption (including, without limitation, disruptions in relationships with
employees, customers or suppliers) may be greater than expected in connection
with the Transaction; (viii) litigation and any unexpected costs, charges or
expenses resulting from the Transaction; (ix) the risk that disruption from the
Transaction materially and adversely affects the respective businesses and
operations of the Company and Coherent; (x) potential adverse reactions or
changes to business relationships resulting from the announcement, pendency or
completion of the Transaction; (xi) the ability of the Company to retain and
hire key employees; (xii) the purchasing patterns of customers and end users;
(xiii) the
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timely release of new products, and acceptance of such new products by the
market; (xiv) the introduction of new products by competitors and other
competitive responses; (xv) the Company's ability to assimilate recently
acquired businesses, and realize synergies, cost savings, and opportunities for
growth in connection therewith, together with the risks, costs, and
uncertainties associated with such acquisitions; (xvi) the Company's ability to
devise and execute strategies to respond to market conditions; (xvii) the risks
to realizing the benefits of investments in R&D and commercialization of
innovations; (xviii) the risks that the Company's stock price will not trade in
line with industrial technology leaders; (xix) the risks of business and
economic disruption related to the currently ongoing COVID-19 outbreak and any
other worldwide health epidemics or outbreaks that may arise and (xx) the risks
that the Offering may not be completed. The Company disclaims any obligation to
update information contained in these forward-looking statements, whether as a
result of new information, future events or developments, or otherwise.
These risks, as well as other risks associated with the Transaction, are more
fully discussed in the joint proxy statement/prospectus included in the
registration statement on Form S-4 (File No. 333-255547) filed with the
Securities and Exchange Commission ("SEC") in connection with the Transaction
(the "Form S-4"). While the list of factors discussed above and the list of
factors presented in the Form S-4 are considered representative, no such list
should be considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional obstacles to
the realization of forward looking statements. Neither the Company nor Coherent
assumes any obligation to publicly provide revisions or updates to any forward
looking statements, whether as a result of new information, future developments
or otherwise, should circumstances change, except as otherwise required by
securities and other applicable laws.
Additional Information and Where to Find It
This communication does not constitute an offer to buy or solicitation of an
offer to sell any securities. In connection with the Transaction, II-VI and
Coherent filed with the SEC the Form S-4 on April 27, 2021 (as amended on May 4,
2021 and as supplemented by Coherent in its Form 8-K, as amended, filed with the
SEC on June 15, 2021), which includes a joint proxy statement of II-VI and
Coherent and also constitutes a prospectus with respect to shares of II-VI's
common stock to be issued in the Transaction. The Form S-4 was declared
effective on May 6, 2021, and II-VI and Coherent commenced mailing to their
respective stockholders on or about May 10, 2021. This communication is not a
substitute for the Form S-4, the Joint Proxy Statement/Prospectus or any other
document II-VI and/or Coherent may file with the SEC in connection with the
Transaction. INVESTORS AND SECURITY HOLDERS OF II-VI AND COHERENT ARE URGED TO
READ THE JOINT PROXY STATEMENT/PROSPECTUS, FORM S-4 AND OTHER DOCUMENTS FILED
WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY IN THEIR ENTIRETY, AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION. Investors and security holders are able to obtain free copies of
these documents and other documents filed with the SEC by II-VI and/or Coherent
through the website maintained by the SEC at www.sec.gov. Copies of the
documents filed with the SEC by II-VI may be obtained free of charge on II-VI's
investor relations site at https://ii-vi.com/investor-relations. Copies of the
documents filed with the SEC by Coherent may be obtained free of charge on
Coherent's investor relations site at https://investors.coherent.com.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation or sale would be unlawful prior to
the registration or qualification under the securities laws of any such
jurisdiction.
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